Throw in a dovish Fed­eral Reserve along with signs of progress in trade talks, and the sell-off of just a few months ago seems a dis­tant mem­ory.

The yuan’s 14-day rel­a­tive strength against the dol­lar is at the high­est since Fe­bru­ary 2018, re­flect­ing a rise in buy­ing mo­men­tum.

In­vestors are turn­ing bullish on the Chi­nese cur­rency, which has room to climb fur­ther in the long term thanks to a weaker dol­lar, ac­cord­ing to Ken Peng, a Hong Kong­based in­vest­ment strate­gist at Cit­i­group Inc.

The green­back had fallen to its weak­est level since Septem­ber, mak­ing dol­lar as­sets less ap­peal­ing rel­a­tive to those de­nom­i­nated in the yuan.

The slide came as sev­eral Fed of­fi­cials, in­clud­ing chair­man Jerome Pow­ell, re­in­forced the mes­sage that the US will likely take a break from rais­ing rates in the com­ing months.

Pow­ell said on Thurs­day the Fed will keep shrink­ing its bal­ance sheet.

Traders have been par­ing bear­ish bets on the Chi­nese cur­rency quickly and even turned slightly bullish in the op­tions mar­ket.

That had pushed the off­shore yuan’s one-month risk re­ver­sal down to the low­est level since 2011 this week.

The off­shore yuan will rise to 6.6 per dol­lar, as progress on trade talks, less bear­ish sen­ti­ment among on­shore cor­po­rates and a re­bound in cap­i­tal in­flows will sup­port the cur­rency, Lu Sun, a strate­gist at Cit­i­group in Hong Kong, wrote in a note yes­ter­day.

For­eign in­vestors boosted their hold­ings of Chi­nese debt last month by the se­cond-most on record – re­vers­ing Novem­ber’s net sell­ing.

The $12tn mar­ket will see $80bn of in­flows this year, ac­cord­ing to Mor­gan Stan­ley, with some on­shore debt on track for a phased-in in­clu­sion to the Bloomberg Bar­clays Global Ag­gre­gate In­dex in April.

The on­shore yuan surged 0.64% to 6.7458 per dol­lar as of 4.39pm in Shang­hai, ex­tend­ing its jump from Jan­uary 4 to 1.9%.

That’s the ex­change rate’s big­gest weekly ad­vance since July 2005 on a clos­ing ba­sis, when China aban­doned its cur­rency peg to the green­back.

The yuan is also the top per­former in Asia over the past five days.

An em­ployee counts 100 yuan notes at a bank in Nan­tong, Jiangsu prov­ince. The yuan’s 14-day rel­a­tive strength against the dol­lar is at the high­est since Fe­bru­ary 2018, re­flect­ing a rise in buy­ing mo­men­tum.